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Response to Nye Bevan (Original post)

Thu Sep 26, 2013, 09:17 AM

3. A small part of the story, designed to deflect attention from Lansing, Washington and Wall Street.

Last edited Thu Sep 26, 2013, 01:36 PM - Edit history (1)

How Detroit went broke: The answers may surprise you - and don't blame Coleman Young

By Nathan Bomey and John Gallagher
Detroit Free Press Business Writers, Sep. 15, 2013

EXCERPT...

Instead, amid a huge exodus of residents, plummeting tax revenues and skyrocketing home abandonment, Detroitís leaders engaged in a billion-dollar borrowing binge, created new taxes and failed to cut expenses when they needed to. Simultaneously, they gifted workers and retirees with generous bonuses. And under pressure from unions and, sometimes, arbitrators, they failed to cut health care benefits ó saddling the city with staggering costs that today threaten the safety and quality of life of people who live here.

The numbers, most from records deeply buried in the public library, lay waste to misconceptions about the roots of Detroitís economic crisis. For critics who want to blame Mayor Coleman Young for starting this mess, think again. The mayorís sometimes fiery rhetoric may have contributed to metro Detroitís racial divide, but he was an astute money manager who recognized, early on, the challenges the city faced and began slashing staff and spending to address them.

And Wall Street types who applauded Mayor Kwame Kilpatrickís financial acumen following his 2005 deal to restructure city pension debt should consider this: The numbers prove that his plan devastated the cityís finances and was a key factor that drove Detroit to file for Chapter 9 bankruptcy in July.

The State of Michigan also bears some blame. Lansing politicians reduced Detroitís state-shared revenue by 48% from 1998 to 2012, withholding $172 million from the city, according to state records.

CONTINUED...

http://www.freep.com/interactive/article/20130915/NEWS01/130801004/Detroit-Bankruptcy-history-1950-debt-pension-revenue

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